From no formal relations to the best of win-win relations
China and the Republic of Korea (South Korea) only formally established ties in 1992 but since then, relations have intensified in a short period of time to the clear economic benefit of both nations. Since 2004, China has been South Korea’s number one trading partner and today, South Korea’s world-class export industry sends more goods to China than any other nation whilst the Chinese industrial superpower’s goods also account for the greatest amount of imports from a single foreign nation in the South Korean marketplace.
China and South Korea continue to expand their economic relations especially since a free trade agreement went into effect between the two major north east Asian economies in 2015. Even when China voiced its concerns to Seoul in 2017 regarding the presents of an increased number of US made THAAD missile systems on South Korean soil, trade continued to grow between the two countries. Ultimately, under the Presidency of Moon Jae-in, relations have reached historic highs.
Defying protectionism as partners
First of all, as a leader always inclined towards peace and dialogue, quite unlike his predecessor Park Geun-hye, Moon was sensitive to China’s displeasure with the presence of THAAD in South Korea and worked to reach a private understanding on the issue in October of 2017.
At the same time, Donald Trump’s protectionist push has seen South Korea on the receiving end of both US tariffs and so-called anti-dumping measures in recent months. South Korea has already taken its dispute over the US accusing South Korea of dumping cheap goods on the US market to the World Trade Organisation (WTO) in a clear sign of Seoul’s displeasure with Washington’s seeming abandonment of free trade under Trump.
Just as the US is pushing countries like South Korea in the direction of new free trading partnerships with countries that continue to support and champion free trade – as both a supporter and champion of free trade, China’s increasingly opened market place is becoming a central point of attraction for South Korea.
China is the open door that South Korea seeks
In a clear sign that the US and China are now in the midst of embracing two antithetical approaches to global commerce, China is opening its markets to foreign capital and goods at a more rapid pace than at any time in its modern history. This is happening just as Trump is sanctioning and putting tariffs on some of the worlds’ most dynamic economies which has already forced many American trading partners to implement reciprocal tariffs on US imports. This naturally plays into South Korea’s desire to find new export markets while also fitting into China’s goal of seeking new partners for inward trade and investment.
Chinese Premier Li Keqiang has just met Chung Sye-kyun, the former speaker of the National Assembly of South Korea in Beijing. Li communicated to Chung the importance of boosting already good bilateral trade and furthermore, the two discussed how to take this healthy relationship to the next level on the win-win model.
According to a report on the meeting from Xinhua,
“Chinese Premier Li Keqiang on Friday called on China and the Republic of Korea (ROK) to uphold the multilateralism and free trade system against the backdrop of a trend of protectionism, unilateralism, and deglobalization.
Li made the remarks when meeting with ROK representatives who attended the first round of Sino-ROK Entrepreneurs and Former High-level Officials Dialogue held Friday in Beijing.
Noting that China and the ROK are neighbors and important partners, Li said bilateral ties have improved and developed while the regional situation has ameliorated, thus the two countries are facing new opportunities to enhance mutually beneficial cooperation.
As major economies in the region and the world, China and the ROK should jointly uphold the multilateralism and the free trade system and boost the liberalization and facilitation of trade and investment amid the trend of protectionism, unilateralism, and deglobalization, said Li.
He expressed the hope that both sides will steadily forge ahead the China-Japan-ROK free trade agreement talks in line with the consensus reached at the China-Japan-ROK leaders’ meeting held in Japan in May so as to inject confidence and vitality into the economies of two countries, the region, and the world.
China and the ROK have complementary development advantages, while enterprises from both countries enjoy a sound foundation of cooperation and broad prospects, said Li.
He said China will open wider, further transform government functions, further unleash market vitality, optimize business environment and treat Chinese and foreign enterprises equally”.
Taken in totality, it cannot be denied that Beijing and Seoul’s good relations were a clear motivation factor in respect of the success of the recent Korean peace process for several reasons.
A push factor for the DPRK
Kim Jong-un and his colleagues in the DPRK (North Korea) will have clearly seen the mutual benefits that both Beijing and Seoul continue to derive from their growing economic partnership. While for its own unique reasons, China joined the rest of the UN Security Council including both Russia and the US in pushing sanctions on the DPRK, China and the DPRK’s neighbour to the south continued to grow wealthy.
Furthermore, even as South Korea is along with Japan, America’s closest post-1945 partner in north east Asia, this was ultimately not a stumbling block in the way of a win-win partnership between America’s rival China and America’s partner in South Korea. This clearly would have made the DPRK think twice about pursuing policies which ultimately left it cut out of the win-win partnerships springing up on all sides of its borders.
A pull factor for the DPRK
At the same time, in being surrounding by a South Korea to China partnership and another rapidly growing Russia to South Korea partnership, the DPRK was quite literally the odd man out in the middle of rapidly growing cross peninsular trading partnerships. With China and Russia expanding trade with one another and both superpowers increasing their trade with the once distant South Korea, it was as if to say to the DPRK “join the win-win club”.
Russian President Vladimir Putin formalised this invitation in the autumn of 2017 when he called for a tripartite economic cooperation zone between his country and both Korean states. Today, such a partnership is already being discussed intensely with all perspective parties and all with the blessing and encouragement of China. In this sense, a new Russia-Korea Transport Corridor can function as an important element of an expanded One Belt–One Road which would also include expanded trade routes from the DPRK into China which given the new push for peace and interconnectivity, would also be capable of facilitating the flow of more South Korean goods into China.
With Donald Trump proudly showing Kim Jong-un a video about the potential of a DPRK-US economic relationship, one has reached a seemingly unthinkable reality where the US is actively tempting (with both big sticks and big carrots) the DPRK into a partnership with Washington, all the while the Trump protectionist model is pushing an historically friendly and once subservient South Korea into the economic arms of China’s win-win model.
South Korea and China’s warming trade relations may well have sent a message to the US that in actively pushing away old partners, the best thing to do is attempt to cultivate new ones – in this case the most unlikely but likewise untapped new partner of all in the form of the DPRK.
Thus, one sees that seemingly contradictory regional developments have helped to both push and pull the DPRK into a positive peace process while now the DPRK faces offers of future economic cooperation from South Korea, China, Russia and the United States – four governments who just months ago sought and largely achieved the DPRK’s further economic isolation.
Throughout this process, China’s warm relations with Seoul have been woefully underestimated even though in reality – this may well have been the geopolitical “x-factor” which sent all the correct signals to both Pyongyang and Washington that the time was right for peace and reconciliation in 2018.